By Leith van Onselen QBE LMI has released its latest Mortgage Barometer Survey, which shows that the overwhelming majority of First Home Buyers (FHBs) believe that Australian housing is overvalued. From  Property Observer: More than three quarters (76%) of first-home buyers believe property is overvalued with nearly half (48%) believing prices are overvalued by more than 10%. In comparison just 41% of owner-occupiers and 48% of Australians believe property prices are overvalued, according to the online survey of 1,107 adult Australians responses of which 763 have a mortgage, 680...

By Leith van Onselen The Queensland Department of Environment and Resource Management (DERM) has released data on housing transfers and mortgage lodgements for the month of May. According to DERM, the number of housing transfers rose by 8.1% in May, whereas the number of mortgage lodgements increased by 8.0% over the month (see next chart). On a year-on-year basis, transfers rose by 9.2% in May, whereas mortgage transfers increased by 7.0% (see next chart). You can see that Queensland transfers and mortgage lodgements had been in an up-trend since late-2011, but have stalled...

By Leith van Onselen Yesterday's New South Wales State Budget revealed some positive news regarding the success of the recently re-vamped First Home Buyers' Grant (FHOG), which last October removed the $7,000 grant on pre-existing dwellings to an expanded $15,000 grant on newly constructed dwellings. According to the Budget Papers, the change to the FHOG has led to a large increase in first home buyer (FHB) demand for newly constructed dwellings, with around 40% of FHBs purchasing new dwellings currently, versus roughly 15% prior to the changes: In the 2012-13 Budget, the Government more...

By Leith van Onselen SQM Research has today released rental vacancy data for the month of May, which revealed an ongoing increase in residential rental vacancies, with the vacancy rate increasing to 2.1% nationally over the month, up from 2.0% in April and 1.8% in May 2012 (see next table). From the Media Release: The majority of capital cities either experienced modest rises, or remained the same during May, with Darwin being the only city to experience a decline – falling from 1.1% to 1.0% month on month. This result reflects a rental market that is continuing to loosen, albeit...

By Leith van Onselen Please find below RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 16 June 2013. This week’s report includes: Latest weekly dwelling value results; Latest median house & unit prices; Average time on market & vendor discounts; Auction results & clearance rates; Number of for sale listings; Mortgage market activity; and New listings activity. Full report below. Weekly RP Data Property Wrap (WE 16 June...

By Leith van Onselen Auction clearance rates in Australia’s two biggest markets – Sydney and Melbourne – bounced back over the weekend. In Australia’s biggest auction market – Melbourne – clearances rose to 70% on 740 auctions reported to the REIV. However, with 39 auctions listed as "no result", the final clearance rate is likely to be downgraded by a few percent as late results come in (see below table). Despite the likelihood that the final auction clearance rate will be revised downwards, the weekend's result was an improvement on the 66% provisional clearance rate...

By Leith van Onselen Over the weekend, the New South Wales Government revealed that it would extend the $15,000 first home owners' grant (FHOG) on newly constructed dwellings until 2016 amid signs of life in the construction sector. From Property Observer:   The first home owner grant was due to be reduced to $10,000 in six months time on 1 January, 2014. It now has another two years at $15,000 during which developers and home builders will pursue the recently hesitant first home buyer constituency. "We're saying to every first home owner across the state, if you are thinking of...

The AFR's Chris Joye argued over the weekend that: The pessimism about Australia’s fundamentals focuses on four things: the fading mining investment boom (ignoring the export expansion it is unleashing); questions about our trading partners’ prospects (in particular China and Japan); the assumption neither the consumer nor housing will fill the growth hole left by tapering investment; and, finally, concerns the RBA and Treasury have expended too much ammunition — via record low rates, big structural deficits and a gross government debt-to-GDP ratio approaching 1993 peaks — before a real...

By Leith van Onselen HSBC has today announced that it is slashing its fixed home loan rates. As shown by the below table, HSBC's two-year fixed rate loan will fall to just 4.59% - reportedly the lowest fixed rate in Australia - with three and five-year fixed rates falling to 4.79% and 5.09% respectively for new and existing customers. In its Media Release, HSBC cites falling wholesale funding costs as the driver behind the move, although it does also suggest that HSBC now believes that official interest rates are headed lower (as argued at...

By Leith van Onselen In the week ended 13 June 2013, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, recorded a large 0.41% increase. It was the first weekly rise in five weeks (see next chart). All capital cities, except for Adelaide, recorded value increases (see next chart). Values are up 0.24% so far in June, with all major capitals, except Melbourne, recording increases (see next chart). Since the end of last year, home values have risen by 1.23% at the 5-city level, with all markets except Melbourne experiencing...

By Leith van Onselen RP Data has today released its weekly Property Pulse (below), which provides a summary of the week's key property-related data, as well as special report on property transaction volumes, which are starting to lift off last year's lows: For the year to March 2013, rpdata estimated that 400,209 house and unit sales occurred nationally which is 2.3 per cent more sales than over the same period a year ago. However, this is 8.8 per cent fewer sales compared with the five year average. According to Mr Lawless, dwelling sales based on trend, have been rising since the...

By Leith van Onselen Recent housing finance figures from the Australian Bureau of Statistics (ABS) has revealed ongoing weakness in mortgage demand from first home buyers (FHBs), but strong demand from both investors and upgraders (see next chart). While the number of FHB mortgage commitments rose by 5% in April following March's 12% rise, they were down by 2% over the past year and were 28% below the 5-year moving average (5YMA): Despite the lift in actual numbers, the proportion of total owner-occupied loans going to FHBs was 14.3% in May, which was only marginally above March's...

By Leith van Onselen The Department of Sustainability & Environment (DSE) yesterday released data on the number of housing transfers and mortgage lodgements/disharges across Victoria in for both April and May, which revealed ongoing weakness in both housing turnover and mortgage demand. Looking at the transaction side of the market first, you can see that the number of transfers over both April and May to be 30% higher than the record low recorded in March 2013 (see next chart). However, the data series is not seasonally adjusted and is, therefore, inherently volatile. Accordingly,...

By Leith van Onselen Please find above the RP Data Housing Update for June, presented by Tim Lawless, which discusses the state-of-play of the Australian housing market as at end-May. This month’s video sees Lawless discussing last month's 1.2% drop in national capital city dwelling values, the second consecutive fall in home values after the RP Data index showed a 0.5% decline over April. Despite the recent price falls, Lawless sees measured improvement in other key housing-related indicators, such as improved auction clearance rates, faster selling times, and higher transaction...

By Leith van Onselen Today’s mixed housing finance data for April, released by the Australian Bureau of Statistics (ABS), contained some positive news for the construction industry, with the number of finance commitments for new dwellings and construction stabilising at a relatively high level (flat over the month) to be 17.9% higher than April 2012 and tracking well above the 5-year moving average (5YMA): The recovery is more obvious when the data is plotted on a rolling annual basis, which shows a clear acceleration of commitments over the past year (see next chart). As shown...

By Leith van Onselen The Australian Bureau of Statistics (ABS) has just released housing finance data for the month of April, which registered a seasonally-adjusted 0.8% increase in the number of owner-occupied finance commitments over the month. It was the third consecutive increase in owner-occupied commitments but missed analyst’s expectations of a 2% rise. The number of owner-occupied housing finance commitments (excluding refinancings) registered a seasonally-adjusted 0.7% decrease over the month of April to be tracking 1% above the five-year moving average level. The series is...

By Leith van Onselen Auction clearance rates in Australia’s two biggest markets – Sydney and Melbourne – retraced over the long weekend, with both markets recording large falls on thin volumes. In Australia’s biggest auction market – Melbourne – clearances fell to 66% on 158 auctions reported to the REIVe to 74% on 721 auctions reported to the REIV (see below table). The result was significantly worse than the 74% provisional clearance rate recorded last weekend on 721 auctions, which was downgraded to a final clearance rate of 73% on 773 auctions after late results were...

David Llewellyn Smith, Leith van Onselen, and respected Australian real estate journalist and buyers advocate, Catherine Cashmore, talk with Gunnamatta about where the real estate market currently is, where it has come from, and the factors which will determine where it is going. The discussion explores the role rising real estate prices play in spurring aggregate demand in the face of a mining capex wind down, while outlining the risks real estate faces, the implications of having an investor driven market with younger buyers priced out, the political status quo against changing real estate...

By Leith van Onselen SQM Research has released stock on market data for the month of May, which registered a large 4.8% increase in for sale listings over the month nationally and a 1.3% increase over the year (see next table). While the market is two speed - with listings in Sydney, Perth and Darwin remaining relatively tight - the overall lift in the number of listings nationally suggests that the housing market recovery remains tepid. From the SQM Media release: Overall, if the market was indeed stronger, stock levels would be decreasing despite of seasonality. However, we see that...

By Leith van Onselen In the week ended 6 June 2013, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, recorded a large -0.22% decline, which followed last week’s -0.49% fall. It was the fourth weekly decline in a row (see next chart). Results were mixed, with falls in Sydney, Melbourne and Brisbane partly offset by rises in Perth and Adelaide (see next chart). Since the end of last year, home values have risen by 0.82% at the 5-city level, with all markets except Melbourne experiencing gains (see next chart). Over the...

From RP Data comes two new reports noting significantly improved selling conditions across Australia, with auction clearance rates, time on market, and the number of homes listed for sale all showing marked improvement over April. Releases below. RP Data Property Pulse (WE 6 June 2013) RP Data - April Sales...

By Leith van Onselen The Adelaide Bank/Real Estate Institute of Australia (REIA) has today released its quarterly affordability report, which revealed an ongoing improvement in home buyer affordability over the March quarter of 2013, although the number of first home buyers (FHBs) has dropped markedly. Rental affordability also worsened over the quarter. According to the Media Release: The first quarter of 2013 saw a slight improvement in housing affordability with the proportion of income required to meet loan repayments decreasing 0.5 percentage points to 29.9% according to the Adelaide...

By Leith van Onselen Australian Finance Group (AFG) yesterday released its housing finance data for the month of May, which registered the Group’s strongest monthly mortgage applications on record, with 8,921 mortgage applications (valued at $3,608 million) processed over the month, an improvement of 16.8% on May 2012 (see next chart). According to the media release: Demand for mortgages rose most strongly in WA, where mortgages processed increased by 17.7% over April, followed by Victoria (+14.6%), NSW (+10.9%), SA (+8.6%) and QLD (+7.2%). Demand rose consistently across all buyer...

By Leith van Onselen As argued previously, the sharp escalation of Australian home prices since the mid-1990s has been caused primarily by a surge in land values, which roughly doubled in size relative to the size of the economy, as measured by GDP (see next chart). The explosion of land values is also reflected by the below chart showing the growth of house values (including both structures and land) far outstripping the growth of the ABS project homes index, which measures the cost of building new dwellings (excluding the land): On Friday night, Prosper Australia released a...

Yesterday Westpac noted that there is an increasing divergence between high auction clearance rates and property prices: That said, the divergence is not normally that large. On balance we would tend to favour the auction data for now but will as it stands the price data is showing no indication of following earlier high clearance rate periods into double-digit price growth territory. The answer is simple enough. There may be more folks attending auctions. There may be more properties being sold. What there is not more of is credit. Check out this chart of the average loan size from the ABS Housing...